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Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption : The Case of American and Polish Data

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  • François Gardes

    (Crest)

  • Greg J, Duncan

    (Crest)

  • Patrice Gaubert

    (Crest)

  • Christophe Starzec

    (Crest)

Abstract

The problem addressed in this article is the bias to income and expenditure elasticities estimated on pseudo-panel data caused by measurement error and unobserved heterogeneity. We gauge empirically these biases by comparing cross-sectional, pseudo-panel and true panel data from both Polish and American expenditure surveys. Our results suggest that unobserved heterogeneity imparts a downward bias to cross-section estimates of income elasticities of at-home food expenditures and an upward bias to estimates of income elasticities of away-from-home food expenditures. "Within" and first-difference estimators suffer less bias, but only if the effects of measurement error are accounted for with instrumental variables.
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Suggested Citation

  • François Gardes & Greg J, Duncan & Patrice Gaubert & Christophe Starzec, 2002. "Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption : The Case of American and Polish Data," Working Papers 2002-02, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2002-02
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